Author: Avni Bhargava, III year of B.B.A.,LL.B.(Hons.) from Amity Law School , Noida
Will the hotel be liable if your vehicle gets stolen after the keys have been handed to them for valet parking or it can absolve its liability? This question was addressed by the Supreme Court for the first time on November 14, 2019.
Sapan Dhawan on 1st August 1998 in his Maruti Zen Car visited the Hotel Taj Mahal. After arriving at the hotel he handed car keys for parking to the Hotel valet after that he was given a parking tag that contains a provision that says that hotel authorities are not responsible for damage, theft or any other loss of the car and the guest will be responsible for the same. At midnight around 1 am Sapan Dhawan was informed that his car was taken away by another person. Hotel authorities informed Sapan Dhawan that three boys visited the hotel by car, they asked the hotel valet to bring their car from the parking area and meanwhile one of them took Sapan Dhawan car key from the desk which was not locked and then they ran away along with the car. The guard tried his best to stop them but failed. He filed a complaint in the police station, but the police were not able to trace his car. Sapan Dhawan's car was insured by the insurance company so he received the amount of 2.8 lack which was the price of the car from the insurance company later Sapan Dhawan along with the insurance company filed a case against the hotel for payment of car price.
A letter of subrogation was executed by Sapan Dhawan to the insurance company after that Sapan Dhawan along with the insurance company made a complaint in the State commission against Taj hotel for payment of the price of the car. The complaint was dismissed by the commission because the company is not a consumer. After the complaint was dismissed by the state commission, the company along with Sapan Dhawan filed the complaint at the national commission.
The national commission stated that Insurance companies can file a complaint after that state commission allowed Insurance company complaints and held that in this case, bailment laws will apply. It was held by the commission, Rupees two lakhs and eighty thousand along with 12% interest P.A and rupees fifty thousand which is litigation cost shall be paid by Taj Hotel also the hotel was directed to pay rupees one lakh as an inconvenience cost by the hotel to the company. It was held by the national commission that hotel authorities cannot escape their liability just by giving tags to their guests. The relation of bailment exists between the hotel and Sapan Dhawan the moment car keys are given to hotel staff for parking and therefore the hotel is liable in this case because of not taking enough precaution as a five-star hotel for the car parking facility.
The hotel appealed to the supreme court against the national commission judgement. As per the hotel, the insurance company is not the customer and the national commission relied on infra hospitium principle according to which hotel is liable for both guest and their property in case of theft, damage etc., Hotel contended that this principle is not established in Indian law on which national commission relied. The hotel relied on the judgement of the Supreme Court in the Advocate v State Management case and said that the parking tag is given to customers clearly state that the hotel authorities will not be involved in any theft. The insurance company on the other side contended that in the capacity of subrogating it can file a case.
The case revolved around sections 152, 151, 149, 148 of the Indian Contract Act.
First issue: Can the insurance company file a complaint in the capacity of subrogee?
Sapan Dhawan who is respondent number two, in this case, have given a subrogation letter to the insurance company, respondent number one apart from POA that is power of attorney is also executed by Sapan Dhawan in Insurance company favour hence the complaint filed in the national forum by the insurance company is valid and maintainable. The insurance company and car owner, Sapan Dhawan are co –complaints. Economic transport organisation v. Charan Mills, this is the case on which Supreme Court relied while solving issue first of insurance company acting as a subrogate.
Second issue: Under bailment law or any other law in India, are hotel authorities liable for car theft in parking valet?
The Supreme Court held that for issue second that is hotel liability section 149 and 148 of Indian contract act would be applied. Delivery of the car was done when Sapan Dhawan handed the key to hotel staff for parking. As the hotel provides a parking facility, an implied consideration for the contract of bailment is created.
Third issue: If the hotel (Appellant) is liable for car theft, what degree of care should be taken by the management of the hotel?
The Supreme Court stated that the moment car keys are handed to hotel staff for parking purposes, it should take the required care and keep the vehicle safe. When the car is handed over to hotel staff an implied obligation exists. As per the Indian contract act chapter nine if the property is lost in bailee possession, the bailee will bear the burden to prove that reasonable care was taken. The court also held that as a five-star hotel reasonable care was not taken by hotel staff to keep the keys safe and out of reach of other people therefore the bailee that is hotel is liable for not taking the necessary care.
Fourth issue: Can the hotel liability be absolved?
The Supreme Court observed that Taj hotel liability cannot be absolved in this case as it did not take the required degree of care and by arguing about third party act it cannot escape its liability. There was negligence on the side of the hotel and it should be affixed by it. Once the keys to the car are handed over to the hotel staff, an implied contract is created and it becomes their responsibility to take care of the guest's car and keep it safe.
When a person visits a hotel, he mostly depends on the hotel authorities for parking. Sometimes valet parking is given as a complimentary service like some other services. Many a time hotels are situated in areas where there is no other parking area outside other than hotel parking areas. In such a situation people have no option other than depending on hotel parking areas and trusting hotel management therefore the hotel management should make sure that vehicles of guests remain safe. When the hotels are of good standard and reputation, the standard of care should also be high such as Taj hotel this case which is a five-star hotel, if the hotel is not held liable for negligence in this case section 151 of the Indian contract act will not serve its purpose but the hotel will not be liable in all the cases, in certain situations like an act of 3rd party, the guest owns negligence, circumstances which are not ordinary, bad weather conditions in such types of situation hotel may not be liable if it is proved from their side that required degree of care was taken.
When the hotel staff have been negligent such as in this case, where the key of the car was easily taken by the boys it is clear that the required degree of care was not taken by the hotel, the keys were not kept in a safe place, therefore, the hotel is liable for negligence. One important thing to note here is, that if any other staff of the hotel other than the person who has given the responsibility to look upon the vehicle takes the vehicle in such a case the hotel is not liable. It was held by the court in the Pollock v Mulla case as it will come under third party act. In this case, therefore, the Taj hotel cannot be exempted from liability on the basis that it was a third party and they will be liable and will not be protected by the clause of owner’s risk. From the facts of the case, it is clear that it was simple theft and no violence was involved, if violence was involved the hotel can argue that theft was not because of lack of care.
Supreme Court judgement, in this case, make it clear that just appointing guard to look after vehicles is not sufficient and the hotel should take additional steps as per the standard of the hotel such as CCTV camera, additional guards, keeping keys in a safe place out of the reach of strangers, keeping a check in the parking area these are some of the steps that can be taken by the hotel management. This case makes use of some foreign judgement therefore this case will act as a guide on the usage of foreign judgements. This case will also play the role of precedent for future cases.
(CASE MINE ,) https://www.casemine.com/judgement/in/5ad056c0add7b012c378132d,(last visited Aug.28,2021)
Economic Transport organization v . Charans. Mills (p) Ltd., AIR 2002, SC 271
( Indian kannon )https://indiankanoon.org/doc/135865865/(last visited Sep .25,2021)